[Federal Register Volume 76, Number 178 (Wednesday, September 14, 2011)]
[Notices]
[Pages 56767-56770]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-23388]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

[CMS-9980-NC]


Request for Information Regarding State Flexibility To Establish 
a Basic Health Program Under the Affordable Care Act

AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.

ACTION: Request for information.

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SUMMARY: This notice is a request for information regarding section 
1331 of the Affordable Care Act, which provides States with the option 
to establish a Basic Health Program. This option permits States to 
enter into contracts to offer one or more ``standard health plans'' 
providing at least the essential health benefits described in section 
1302(b) of the Affordable Care Act to eligible individuals in lieu of 
offering such individuals coverage through the Affordable Insurance 
Exchange (Exchange).

DATES: Comment Date: To be assured consideration, responses must be 
received at one of the addresses provided below, no later than 5 p.m. 
on October 31, 2011.

ADDRESSES: In responding, please refer to file code CMS-9980-NC. 
Because of staff and resource limitations, we cannot accept comments by 
facsimile (FAX) transmission.
    You may submit responses in one of four ways (please choose only 
one of the ways listed):
    1. Electronically. You may submit electronic comments on this 
regulation to http://www.regulations.gov. Follow the instructions under 
the ``More Search Options'' tab.
    2. By regular mail. You may mail written comments to the following 
address ONLY: Centers for Medicare & Medicaid Services, Department of 
Health and Human Services, Attention: CMS-9980-NC, P.O. Box 8016, 
Baltimore, MD 21244-8016.
    Please allow sufficient time for mailed comments to be received 
before the close of the comment period.
    3. By express or overnight mail. You may send written comments to 
the following address ONLY: Centers for Medicare & Medicaid Services, 
Department of Health and Human Services, Attention: CMS-9980-NC, Mail 
Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.
    4. By hand or courier. If you prefer, you may deliver (by hand or 
courier) your written comments before the close of the comment period 
to either of the following addresses:

a. For delivery in Washington, DC--Centers for Medicare & Medicaid 
Services, Department of Health and Human Services, Room 445-G, Hubert 
H. Humphrey Building, 200 Independence Avenue, SW., Washington, DC 
20201.

    (Because access to the interior of the Hubert H. Humphrey Building 
is not readily available to persons without Federal government 
identification, commenters are encouraged to leave their comments in 
the CMS drop slots located in the main lobby of the building. A stamp-
in clock is available for persons wishing to retain a proof of filing 
by stamping in and retaining an extra copy of the comments being 
filed.)


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b. For delivery in Baltimore, MD--Centers for Medicare & Medicaid 
Services, Department of Health and Human Services, 7500 Security 
Boulevard, Baltimore, MD 21244-1850.

    If you intend to deliver your comments to the Baltimore address, 
please call telephone number (410) 786-9994 in advance to schedule your 
arrival with one of our staff members.
    Comments mailed to the addresses indicated as appropriate for hand 
or courier delivery may be delayed and received after the comment 
period.
    For information on viewing public comments, see the beginning of 
the SUPPLEMENTARY INFORMATION section.

FOR FURTHER INFORMATION CONTACT: Shaina Rood, (301) 492-4422.

SUPPLEMENTARY INFORMATION:
    Inspection of Public Comments: All comments received before the 
close of the comment period are available for viewing by the public, 
including any personally identifiable or confidential business 
information that is included in a comment. We post all comments 
received before the close of the comment period on the following Web 
site as soon as possible after they have been received: http://www.regulations.gov. Follow the search instructions on that Web site to 
view public comments.
    Comments received timely will also be available for public 
inspection as they are received, generally beginning approximately 3 
weeks after publication of a document, at the headquarters of the 
Centers for Medicare & Medicaid Services, 7500 Security Boulevard, 
Baltimore, Maryland 21244, Monday through Friday of each week from 8:30 
a.m. to 4 p.m. To schedule an appointment to view public comments, 
phone 1-800-743-3951.

I. Background

    Section 1331(a) of the Patient Protection and Affordable Care Act 
(Pub. L. 111-148), as amended by the Health Care and Education 
Reconciliation Act of 2010 (Pub. L. 111-152), referred to collectively 
as the Affordable Care Act, directs the Secretary of Health and Human 
Services (the Secretary) to establish a Basic Health Program under 
which States may enter into contracts with one or more standard health 
plans that provide health coverage to eligible individuals in lieu of 
offering such individuals coverage through the Exchange. For States 
choosing this option, section 1331(a)(2) of the Affordable Care Act 
provides that the Secretary certify that the amount of the monthly 
premium charged to eligible individuals enrolled in a plan under 
contract under this program, called a standard health plan, does not 
exceed the amount of the monthly premium that an eligible individual 
would have paid if he or she were to receive coverage from the 
applicable benchmark plans (as defined in section 36B(b)(3)(B) of the 
Internal Revenue Code of 1986) through the Exchange. This section also 
directs the Secretary to certify that cost-sharing does not exceed the 
standards specified in section 1331(a)(2)(A)(ii) of the Affordable Care 
Act.
    Section 1331(b) of the Affordable Care Act defines a standard 
health plan as one selected by the State that: (1) Only enrolls 
applicants who are determined eligible using the eligibility standards 
specified in section 1331(e) of the Affordable Care Act; (2) covers at 
least the essential health benefits described in section 1302(b) of the 
Affordable Care Act; and (3) in the case of a plan that provides health 
insurance coverage offered by a health insurance issuer, has a medical 
loss ratio of at least 85 percent.
    Section 1331(c) of the Affordable Care Act specifies that a Basic 
Health Program will establish a competitive process for entering into 
contracts with standard health plans, including negotiation of 
premiums, cost-sharing, and benefits in addition to the essential 
health benefits. The statute provides that the State include in its 
competitive process the inclusion of innovative features such as care 
coordination and care management for enrollees, incentives for the use 
of preventive services, and the establishment of relationships between 
providers and patients that maximize patient involvement in health care 
decision-making. The contracting process shall also take into 
consideration, and make suitable allowances for, the differences in the 
health care needs of enrollees and the differences in local 
availability of, and access to, health care providers.
    Section 1331(c)(2) of the Affordable Care Act provides that the 
competitive process shall also include contracting with managed care 
systems, or with systems that offer as many of the attributes of 
managed care as are feasible in the local health care market. The 
competitive contracting process shall also include the establishment of 
specific performance measures and standards for issuers that focus on 
quality of care and improved health outcomes. Section 1331(c)(3) 
provides that a State shall, to the maximum extent feasible, seek to 
make multiple standard health plans available to ensure individuals 
have a choice of such plans. It also provides that a State may 
negotiate a regional compact with other States to include coverage of 
eligible individuals in all such States in agreements with issuers of 
standard health plans.
    Section 1331(c)(4) of the Affordable Care Act directs a State 
choosing to establish a Basic Health Program to coordinate the 
administration of a Basic Health Program with Medicaid, the Children's 
Health Insurance Program (CHIP), and other State-administered health 
programs.
    Section 1331(d)(1) of the Affordable Care Act allows the Secretary 
to transfer Federal funds to a State that establishes a Basic Health 
Program in accordance with the standards of the program under section 
1331(a). Section 1331(d)(2) of the Affordable Care Act directs that a 
State establish a trust fund for the deposit of the Federal funds it 
receives for its Basic Health Program, and specifies that the amounts 
in the trust may only be used to reduce the premiums and cost-sharing 
of, or to provide additional benefits for, eligible individuals 
enrolled in standard health plans within a Basic Health Program.
    Section 1331(d)(3) of the Affordable Care Act specifies that a 
State that operates a Basic Health Program will receive 95 percent of 
the amount of premium tax credits, and the cost-sharing reductions, 
that would have been provided to (or on behalf of) eligible individuals 
enrolled in standard health plans through a Basic Health Program, if 
the eligible individuals were instead enrolled in qualified health 
plans (QHP) through the Exchange and receiving premium tax credits and 
cost-sharing reductions. To determine the amount of payment, the 
Secretary shall take into account all relevant factors necessary to 
determine the amount that would have been provided to eligible 
individuals as specified in 1331(d)(3), including, but not limited to, 
whether any reconciliation of the credit or cost-sharing reductions 
would have occurred if the enrollee had been so enrolled.
    Section 1331(d)(3) also provides that the determination shall also 
take into consideration the experience of other States with respect to 
participation in an Exchange and such credits and reductions provided 
to residents of the other States, with a special focus on enrollees 
with income below 200 percent of poverty. Additionally, the Secretary 
shall adjust the amount of payment for any fiscal year to reflect any 
error in the determinations for any preceding fiscal year.
    Section 1331(e) of the Affordable Care Act specifies eligibility 
standards for a Basic Health Program. To be determined

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eligible for a Basic Health Program, an individual must:
    (1) Be a resident of a State participating in a Basic Health 
Program;
    (2) Be eligible for enrollment in a QHP through the Exchange but 
for the existence of a Basic Health Program;
    (3) Not be eligible to enroll in the State's Medicaid program under 
title XIX of the Social Security Act (the Act), for benefits that at a 
minimum consist of the essential health benefits described in section 
1302(b) of the Act;
    (4) Have a household income that exceeds 133 percent but does not 
exceed 200 percent of the Federal poverty level (FPL), or, for a non-
citizen lawfully present who is not eligible for Medicaid based on 
immigration status, a household income that is not greater than 133 
percent of the FPL;
    (5) Not be eligible for minimum essential coverage or is eligible 
for an employer-sponsored plan that is not affordable coverage; and
    (6) Not have attained age 65 as of the beginning of the plan year.
    Section 1331(f) of the Affordable Care Act directs the Secretary to 
conduct an annual review of each State Basic Health Program to ensure 
that it complies with the standards of section 1331. Through this 
annual review, the State will provide information to demonstrate that 
its Basic Health Program meets: (1) Eligibility verification standards 
for participation in the program; (2) standards for the use of Federal 
funds received by the program; and (3) quality and performance 
standards.
    As specified in section 1331(g) of the Affordable Care Act, a 
standard health plan offeror may be a licensed health maintenance 
organization, a licensed health insurance insurer, or a network of 
health care providers established to offer services under the program; 
the statute provides authority for the State to determine eligibility 
to offer a standard health plan.

II. Request for Information

    Section 1321(a)(2) of the Affordable Care Act directs the Secretary 
to consult with stakeholders to ensure balanced representation among 
interested parties in issuing regulations to implement programs 
pursuant to title I. The Department of Health and Human Services has 
consulted with stakeholders through regular meetings with the National 
Association of Insurance Commissioners, regular contact with States 
through the Exchange grant process, and meetings with tribal 
representatives, health insurance issuers, trade groups, consumer 
advocates, employers, and other interested parties. This consultation 
will continue throughout the development of guidance and regulations 
related to the Basic Health Program.
    As such, we are requesting information to aid in the development of 
standards for the establishment and operation of a Basic Health 
Program. To assist in responding, this request for information 
describes the specific areas where input is particularly requested.
    Specifically, we ask for responses to the questions below to 
provide the Secretary with relevant information for the development of 
guidance and regulations regarding the Basic Health Program. However, 
it is not necessary for respondents to address every question below and 
respondents may also address additional issues about the Basic Health 
Program that are not listed here. Individuals, groups, and 
organizations interested in providing responses may do so at their 
discretion by following the above mentioned instructions.

A. General Provisions

    1. What are some of the major factors that States are likely to 
consider in determining whether to establish a Basic Health Program? 
Are there additional flexibilities, advantages, costs, savings or 
challenges for the State and/or consumer that would make this option 
more or less attractive to States? If so, what are they?
    2. What are key considerations for States in placing responsibility 
for a Basic Health Program within the State organizational structure?
    3. What are the challenges and costs associated with managing a 
Basic Health Program?
    4. Are States that are exploring the Basic Health Program 
considering implementation for 2014, or for later years? What are the 
key tasks that need to be accomplished, and within what timeframes, to 
implement the Basic Health Program in a timely fashion? What kinds of 
business functions will need to be operational before implementation, 
and how soon will they need to be operational? Are there opportunities 
to leverage existing systems and increase efficiency within the State 
structure? To what extent have States begun developing business plans 
or budgets relating to Basic Health Program implementation?
    5. To what extent have States already begun to assess whether to 
establish a Basic Health Program? What internal and/or external 
entities are involved, or will likely be involved in this planning 
process?
    6. What guidance or information would be helpful to States, plans, 
and other stakeholders as they begin the planning process? What other 
terms or provisions need additional clarification to facilitate 
implementation and compliance? What specific clarifications would be 
helpful?
    7. How can the Administration provide technical assistance? What 
form(s) of technical assistance would be most helpful to States?

B. Standard Health Plan Standards and Standard Health Plan Offerors

    1. What additional standards, if any, should standard health plans 
participating in a State's Basic Health Program meet? What consumer 
protections should be included? How should quality and performance be 
measured?
    2. What plan design issues should be considered? How likely is it 
for a State to consider an expanded benefit package beyond the 
essential health benefits for standard health plans participating in a 
State's Basic Health Program? What are the advantages and disadvantages 
of an expanded benefit package for standard health plans compared to 
qualified health plans?
    3. What is the expected impact of standard health plans on provider 
payments and consumer access?

C. Contracting Process

    1. What innovative features should States consider when negotiating 
through the contracting process with standard health plans to 
participate in a Basic Health Program?
    2. What considerations exist in determining whether to utilize the 
regional compact authority in Section 1331(c)(3)(B) of the Affordable 
Care Act? Are States interested in pursuing this approach?

D. Coordination With Other State Programs

    1. What is the expected impact of a Basic Health Program on the 
Exchange's purchasing power and viability? How might States organize a 
Basic Health Program with respect to purchasing structure?
    2. What is the expected impact of a Basic Health Program on plans 
participating in the Exchange in terms of risk profile, enrollment, and 
premium stability? What is the expected impact on overall coverage?
    3. What are some of the major factors that States are likely to 
consider in determining how to structure their Basic Health Program? 
Are States likely to structure the Basic Health Program as one 
component of its other public

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programs? Are States likely to consider a CHIP-like approach or other 
options? What are the pros and cons of these various options?
    4. How can eligibility and enrollment be effectively coordinated 
between the Basic Health Program and other State programs to reduce 
churning between programs and promote continuity of care?
    5. How could establishing a Basic Health Program affect the ability 
of an entire family to be covered by the same plan?
    6. Are standard health plans likely to also participate in other 
coverage programs, such as the Exchanges, Medicaid, or CHIP? Should 
this be encouraged, and if so, how could CMS and States encourage it?

E. Amount of Payment

    1. The statute specifies that amounts in the trust fund may only be 
used to reduce the premiums and cost-sharing of, or to provide 
additional benefits for, eligible individuals enrolled in standard 
health plans within a Basic Health Program. What options are States 
considering for reducing premiums and cost-sharing, or providing 
additional benefits? What, if any, guidance is needed on this 
provision?
    2. What are the likely administrative costs for a Basic Health 
Program? What factors, especially in terms of resources, are likely to 
affect a State's ability to establish a Basic Health Program? How are 
States likely to fund the costs associated with establishing and 
administering a Basic Health Program?
    3. The statute specifies that in developing the financial 
methodology for the Basic Health Program, the determination of the 
value of the premium tax credits and cost-sharing reductions should 
take into consideration the experience of other States. What 
information would be most helpful to inform this methodology? Should 
implementation of the Basic Health Program be postponed until other 
States' experiences are available?
    4. Other than those listed in the statute, what factors should be 
considered when establishing the methodology for determining the amount 
of Basic Health Program funding to States? How should the Federal 
government implement this calculation?
    5. The statute specifies that the funding calculation is on a per-
enrollee basis. How should the Federal government acquire the detailed 
information necessary to perform this calculation?
    6. What are the best State-specific data sources to use in 
estimating the availability of affordable employer-sponsored insurance?
    7. What methods should be considered to measure and monitor 
compliance with the 95 percent cap on funding? How should CMS implement 
the provisions in Section 1331(d)(3)(B) of the Affordable Care Act 
regarding corrections to overpayments made in any year?

F. Eligibility

    1. What education and outreach will be necessary to facilitate a 
helpful consumer experience?

G. Secretarial Oversight

    1. What process should the Secretary use to certify or recertify 
Basic Health Programs? How should this process be similar to or 
different from Exchange certification?
    2. What should be considered when developing an oversight process 
for the Basic Health Program?

    Authority:  Catalog of Federal Domestic Assistance Program No. 
93.773, Medicare--Hospital Insurance; and Program No. 93.774, 
Medicare--Supplementary Medical Insurance Program.

    Dated: July 27, 2011.
Donald M. Berwick,
Administrator, Centers for Medicare & Medicaid Services.
[FR Doc. 2011-23388 Filed 9-9-11; 11:15 am]
BILLING CODE 4120-01-P